The commercial vehicle industry in India has come of age. The new-design trucks in the 3.5-tonne-plus category, the new-fangled fleet of buses like the Tatas? Marco Polo or the Volvo and the recently showcased Ashok Leyland’s iBus have had the segment in India on a roll. It’s the light commercial vehicles (LCVs) that are seeing most of the action these days owing to the last-mile delivery provided most conveniently by these vehicles.

According to the Society of Indian Automobile Manufacturers, the LCV segment in India, including both passenger and goods carriers, grew 11.26% with 18,964 units sold in December, 2007. This is against a 5.3% dip in growth in the medium and heavy commercial vehicle segment during this period at 23,544 units.

“Currently, 63% of overall freight transport is by roads and this is expected to go up to 67-68% with so many corridors being opened up. As a result, a lot of commercial vehicles, especially in the lower-end of the segment, will be in use to provide last-mile transport, both intra -and inter-city,” says Bajaj Auto?s commercial vehicle division CEO RC Maheshwari. The company has recently announced a foray into the segment with both passenger and commercial vehicles, and plans to launch two ?lite? commercial vehicles in 2009.

“Vehicles in the 3.5-tonne category and up to 12 tonne are largely used to provide feeder services based on the hub and spoke model (transfer between two cities as well as within a city). With a high degree of urbanisation and restrictions on higher tonne vehicles in some cities, there has been a surge in demand,” says Eicher Motors? commercial vehicles business CEO A Ramasubramaniam. Delhi restricts the entry of trucks above 7.5 tonne into the city and this in turn promotes usage of the sub-7.5-tonne vehicles. Whereas, smaller towns largely contribute to the sales of 9-tonne trucks.

“Moreover, strong economic factors like good monsoon and the subsequent high yield of agriculture, combined with rising traffic congestion within cities, have also boosted the overall growth of the segment over the last few years,” adds Ramasubramaniam.

“Also, with an improvement in infrastructure and public transport, buses are expected to grow in number faster provided there are no restrictions on permits, especially within a city. However, growth will be more pronounced among private players that are betting big on improved highways for inter-city transportation,” adds Bajaj’s Maheshwari.

“With a lot of focus on an improved mass rapid transport system and the availability of the buses in CNG versions as well, growth will be robust in the segment over the next few years,” says SIAM director Dilip Chneoy.

At the recently concluded auto expo, Ashok Leyland showcased its high-end luxury bus called iBus and the company is eyeing a thick slice of this fast-growing segment. ?The high-end luxury bus market for intra-city transportation is growing rapidly, with Delhi needing at least 1,000 such buses in the next fiscal. So do Mumbai, Bangalore, Chennai,” says Thomas Abraham, a spokesman of Ashok Leyland. The company will produce 50,000 buses in 2010.

Even Asia Motor Works, a relatively new player in the HCV segment, is now eyeing LCVs, too . “Our focus will be to cover all profit-making segments. We would come up with a bus as well in 2008-09,” says AMW senior vice-president RC Mangal.

No wonder this segment has lately drawn the attention of global players like Nissan, Volvo and others. While Nissan Motor has entered into a joint venture with Ashok Leyland for development, manufacture and distribution of LCVs in India, Volvo has recently tied up with Eicher Motors. Daimler has entered into a joint venture with Hero Motors for all kinds of commercial vehicles. With several global players now vying for a pie in this lucrative segment, there are several challenges before the domestic players.

“Entry of new players will enhance competition and to survive, stand-alone players like the Bajajs and the Tatas have to ensure they provide high-tech and fuel-efficient vehicles,” says Maheshwari.

A lack of uniform tax rates across various states and restricted movement on highways are hampering the smooth passage of these vehicles. “There are a lot of checkpoints on highways in India and the Centre should do away with this practice and put in place a uniform taxation regime if it wants to ensure a faster and more cost-efficient movement of vehicles,” feels Ramasubramaniam.